A corporation is evaluating the cash flows relevant to a capital budgeting decision and must estimate the terminal cash flow. The proposed machine will be scrapped at the end of its five-year useful life at an estimated sale price of $2,000. The machine has an original purchase price of $80,000, an installed cost of $20,000, and will depreciate based on MACRS over five years. Net working capital is expected to decrease by $5,000. The business has a 40 percent tax rate on ordinary income and long-term capital gains.  calculate The terminal cash flow.

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SOLUTION To calculate the terminal cash flow we need to first calculate the salvage value of the mac... View the full answer